More Evidence That US Economy is Recovering

WASHINGTON (AP) — A private measure of the U.S. services sector contracted for the seventh straight month in April but at a slower pace, the latest sign the economic downturn could be moderating. The services index from the Institute for Supply Management came in at 43.7 in April compared with 40.8 in March (see top chart above). Any reading below 50 indicates the service sector, where most Americans work, is contracting. Still, the reading was higher than economists expected and provides another sign the economy’s steep downturn could be bottoming out.

May 5 (Bloomberg) — Service industries in the U.S. contracted in April at the slowest pace in six months, signaling the economic slump is gradually abating. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90% of the economy, rose to 43.7, higher than forecast, from 40.8 the prior month, according to the Tempe, Arizona-based group. Readings below 50 signal contraction.

ISM — The seven industries reporting growth in April based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Retail Trade; Finance & Insurance; Utilities; Other Services; and Accommodation & Food Services.

MP: The bottom graphs shows the ISM indexes for new orders and business activity. Business activity for the service sector is the highest since October, and new orders are the highest since September. Finally, the 8.2 point increase in new orders is the largest one-month increase in the history of the ISM index (back to 1997).

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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